Supervisors, critics clash on sharing pension costs

County officials are moving ahead with a modest pension reform program as proposed by the staff, ignoring critics who contend current Civic Center employees should help pay down a $750 million liability tab.

The Board of Supervisors this week endorsed County Administrator Matthew Hymel's plan to develop options for a "hybrid" pension program for new employees, as well as use $3 million in savings generated by state pension reform over five years to pay down pension liability.

Unlike the current program in which taxpayers are on the hook for benefit liability, a hybrid plan would require new hires to share the risk of pension fund investment volatility. Hymel will seek an accord with union negotiators and seek legislation establishing the legal authority to enact such a custom program for miscellaneous employees.

"We believe this direction would better fit the next generation of workers by providing greater portability while sharing market risk," according to Deputy Administrator Dan Eilerman. "Any potential new option would be subject to agreement with our collective bargaining units."

But the supervisors ignored a call by Citizens for Sustainable Pension Plans, a local pension-reform group, that the county also negotiate with its unions to get current employees to share liability costs that have mounted at the Civic Center, with estimates ranging anywhere from $750 million to $2.4 billion, depending on investment earnings assumptions.

Although state pension reform legislation authorizes such a move, the county board took no action despite a passionate presentation by pension critic David Brown of Mill Valley, who declared that the "holy grail of pension reform" is getting current employees "to pick up a shovel and begin to help fill in the financial hole their own benefits have created."

Supervisor Steve Kinsey, asserting that pension issues are the county's "legislative priority," said all employees "are fairly entitled to believe that what they negotiated in the past" is a ticket they can count on in the future. Instead, the county is focusing on agreements involving future employees, as does the state reform program.

"The more options we have to offer new employees, the better," said Supervisor Katie Rice. She noted that a hybrid plan will be attractive to new employees since it is more "portable" and can follow workers as they switch jobs.

Critics, who began the meeting by noting, as Bob Stephens of San Rafael said, that their relationship with supervisors had grown into one of "mutual respect," left the session in a huff, with Brown noting officials did not make a "single change" in Hymel's proposal. In addition to tapping employees for liability, Brown called for study of whether becoming a charter county could reduce pension liability under "Obamacare" legislation.

County officials made a point of noting that although more must be done, they are moving to corral pension costs. Hymel said the county is paying off liability, which under optimistic stock market investment assumptions is supposed to occur in 17 years. "It is a 17-year payoff, but you've taken steps to accelerate that," Hymel told the board.

A study this year by the county administration indicated that pension benefits offered employees in other Marin jurisdictions were far more generous than those at the Civic Center.

For a rough comparison that focused on core variables, calculations comparing three other agency programs assumed a 25-year-old worker hired for $80,000 last summer received 2 percent annual salary increases over the next 30 years for a last-year salary of $142,000, before retiring at age 55. Although comparisons are complicated, basic calculations indicated:

 Corte Madera pays the retiree $106,550 a year.

 College of Marin pays the retiree $85,200 a year, in addition to Social Security, since the college also is a member of the federal agency, unlike most other public bodies in Marin.

 Fairfax pays the retiree $83,600 a year.

 The county pays the retiree $62,400.

The study indicated that if the retiree lived for 25 years, and received a 2 percent cost of living raise each year, the lifetime pension tab for that retiree in Corte Madera would be $3.4 million; $2.7 million at College of Marin; $2.7 million at Fairfax and $2 million at the Civic Center.